Credit - Process

---

In line with TAMIM’s strategy of selecting best of breed investment managers, the TAMIM Fund – Credit unit class will seek to partner with industry leading private credit investment managers and loan platforms. The TAMIM Fund – Credit unit class provides investors with diversification across lending type, underlying security, counterparty and industry concentration.

The TAMIM Fund – Credit unit class invests into private debt and other credit opportunities with the aim of generating a steady, consistent income stream for investors whilst at the same time seeking to preserve capital. 

It is the role of the investment team to:

• Identify investment opportunities which meet the investment criteria
• Conduct analysis and due diligence of investment opportunities
• Undertake fund raising 
• Monitor performance of investments and report on investments
• Manage investor relation functions and manage service provider relationships
• Corporate governance and risk management processes

​Investment Process 

TAMIM Credit Investments (TCI) will construct the portfolio by making investments through a variety of funds / platforms in Australia that source secured private loans and other credit opportunities. TCI will subscribe to each fund / platform on behalf of the Credit unit class.  TCI will carefully screen the fund / platform and select investments appropriately. This process will consist of undertaking rigorous due diligence on the credentials of the investment team, thoroughness of credit processes and ongoing monitoring and communication with the managers. The Credit unit class will have a portfolio with exposure spread across a diversified pool of loans and credit opportunities.  The aggregated funds of  investors are paid by the Tamim Fund – Credit unit class to the custodians or trustee of each fund / platform who will then advance amounts to the borrower or borrowers as selected by the fund / platform.

​The experienced investment team will conduct a rigorous and thorough due diligence process which includes the following:

People

• A team that displays strong levels of integrity;
• Strong specific credit knowledge;
• Experience including origination, execution and portfolio monitoring capability.

Pedigree

• Strong corporate governance is essential;
• Security of business and overall team experience;
• Infrastructure and compliance review;
• Operational due diligence.

Process

• Understand the complete credit and lending process;
• Evaluate the completeness and quality of the investment managers’ credit policies and procedures;
• Understand loan and borrower eligibility screening, loan approval process, loan administration, portfolio monitoring and reporting;
• Assess loan structures, security arrangements, default rates, geographic and industry concentration.

Performance

• Have the team or business been able to generate a return historically utilising their lending process;
• Assess and understand the underlying performance of investment managers / loan platforms.

Bradley Hill
​Portfolio Manager

Bradley has 16 years of financial services experience encompassing direct lending and private equity investment.

Bradley spent 11 years at Investec, an international specialist bank and asset manager. His experience there included the origination, structuring, execution and ongoing management of lending transactions across a diverse range of asset classes and industry sectors in both the United Kingdom and Australia. This includes project and infrastructure financing of public infrastructure assets such as hospitals, schools and transport systems as well as renewable energy projects. As a founding member of the corporate and acquisition finance team, Bradley was involved in numerous transactions which included the financing of private equity leveraged buy-outs, corporate mergers and acquisitions, asset financings, recapitalisations and restructurings. Debt structures utilised included senior secured loans, bridging finance, asset-backed lending and subordinated debt facilities.

Bradley brings extensive experience across the analysis, execution and ongoing monitoring and management of loan portfolios and is very familiar with the dynamics of the Australian private debt landscape.

Bradley is a member of the South African Institute of Chartered Accountants.

The TAMIM Fund – Credit unit class may invest into the following types of private debt opportunities (amongst others):

• Asset based lending
• Cash flow backed lending
• Corporate debt
• Real estate lending
• Opportunistic credit investments

The Credit unit class will only invest up to a maximum of 5% of its net asset value into loans that are not secured.

The strategy operates within the disciplined TAMIM risk control and governance framework. In addition to this, the Sub Manager of the TAMIM Fund – Credit unit class has appointed an Investment Committee to consider and approve all investment decisions.

 

---

What is Private Debt? 

Private debt is similar to a loan in that it is capital provided (as an investment) to an entity in exchange for interest (and possibly other payments) and the return of the original principal at a defined point in the future. The debt is typically secured and has various protections/covenants in place. The debt is also not widely held (hence private), and is customised to the borrower’s requirements, therefore rendering it illiquid.

Private debt investments have existed for a number of years, but were, for a long time, the preserve of a minority of investors, of which banks and the ultra-wealthy were the most significant. Today, private debt is an asset class increasingly considered by a broad range of investors.

Private debt investments involve the sourcing and managing of loan portfolios that help to fill the current financing gap created by the long term decline in lending by Australian banks to Australian businesses. The new and evolving aspect of Australian and New Zealand private debt is the ability for institutional investors and high net worth individuals to access a larger portion of this market that historically has been the domain of banks.

Private debt can be classified into a number of different subcategories. The three most common methods are by seniority in the capital structure (senior, subordinated, unitranche), the type of lending transaction (corporate, infrastructure, or real estate), and geography. Private lending can be quite broad and covers different segments when looked at from a loan security perspective. Categories include:

Unsecured
Consumer or business loans which are generally smaller in size and where the lending is done against no security. This category tends to dominated by the banks historically but is now being disrupted by the peer to peer lending platforms.

Factoring/Discounting of Invoices
Debtor finance is where a business sells its accounts receivable (invoices) to a third party (called a factor) at a discount. Security is against the cash flow of the invoice.

Equipment Finance
Loans made to businesses generally to allow for the purchase of equipment. Loans are normally secured against the assets purchased.

Property Backed Lending
Business or consumer loans backed against property. This is generally used for residential property purchases and is the domain of the big banks. More private loans are being made with property as security for other uses of the funding. This category can also include development loans which are utilised for the purchase and development of land into various real estate assets. While backed by property security these loans can carry a heavier level of risk due to the development nature of the asset.

Business Cash Flow Lending
Loans made against businesses or the cash flows of businesses. Occasionally these loans can also be secured by property as well or even personal guarantees from the owners of the business requiring the loan.